Correlation Between DIRTT Environmental and Cogeco Communications

Can any of the company-specific risk be diversified away by investing in both DIRTT Environmental and Cogeco Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DIRTT Environmental and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DIRTT Environmental Solutions and Cogeco Communications, you can compare the effects of market volatilities on DIRTT Environmental and Cogeco Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DIRTT Environmental with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIRTT Environmental and Cogeco Communications.

Diversification Opportunities for DIRTT Environmental and Cogeco Communications

0.16

Correlation Coefficient

DIRTT Environmental  Cogeco Communications

Average diversification

The 3 months correlation between DIRTT and Cogeco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding DIRTT Environmental Solutions and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and DIRTT Environmental is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DIRTT Environmental Solutions are associated (or correlated) with Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of DIRTT Environmental i.e., DIRTT Environmental and Cogeco Communications go up and down completely randomly.

Pair Corralation between DIRTT Environmental and Cogeco Communications

Assuming the 90 days trading horizon DIRTT Environmental Solutions is expected to under-perform the Cogeco Communications. In addition to that, DIRTT Environmental is 2.57 times more volatile than Cogeco Communications. It trades about -0.11 of its total potential returns per unit of risk. Cogeco Communications is currently generating about -0.03 per unit of volatility. If you would invest  6,701  in Cogeco Communications on September 27, 2024 and sell it today you would lose (87.00) from holding Cogeco Communications or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DIRTT Environmental Solutions  vs.  Cogeco Communications

DIRTT Environmental

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIRTT Environmental Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIRTT Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Cogeco Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogeco Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DIRTT Environmental and Cogeco Communications

The main advantage of trading using opposite DIRTT Environmental and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIRTT Environmental position performs unexpectedly, Cogeco Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cogeco Communications will offset losses from the drop in Cogeco Communications' long position.

The idea behind DIRTT Environmental Solutions and Cogeco Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.